elasticity 5.pptVIP

5 Elasticity and Its Applications 弹性和它的应用 Elasticity . . . … allows us to analyze supply and demand with greater precision. 让人们更加精确的解释供给和需求的关系 … is a measure of how much buyers and sellers respond to changes in market conditions  THE ELASTICITY OF DEMAND Price elasticity of demand is a measure of how much the quantity demanded of a good responds to a change in the price of that good. Price elasticity of demand is the percentage change in quantity demanded given a percent change in the price.  The Price Elasticity of Demand and Its Determinants Availability of Close Substitutes可用的替代品 Necessities versus Luxuries 必需品与奢侈品 Definition of the Market 市场的定义 Time Horizon 时间跨度 The Price Elasticity of Demand and Its Determinants Demand tends to be more elastic : the larger the number of close substitutes.替代品的数量越多越有弹性 if the good is a luxury. 如果该商品是奢侈品更有弹性 the more narrowly defined the market.市场越狭隘越有弹性 the longer the time period.时间越长越有弹性 Computing the Price Elasticity of Demand The price elasticity of demand is computed as the percentage change in the quantity demanded divided by the percentage change in price. Computing the Price Elasticity of Demand Example: If the price of an ice cream cone increases from $2.00 to $2.20 and the amount you buy falls from 10 to 8 cones, then your elasticity of demand would be calculated as: The Midpoint Method: A Better Way to Calculate Percentage Changes and Elasticities The midpoint formula is preferable when calculating the price elasticity of demand because it gives the same answer regardless of the direction of the change. The Midpoint Method: A Better Way to Calculate Percentage Changes and Elasticities Example: If the price of an ice cream cone increases from $2.00 to $2.20 and the amount you buy falls from 10 to 8 cones, then your elasticity of demand, using the midpoint formula, would be calculated as: The Variety of Demand Curves Inelastic Demand Quantity demanded does not respond strongly to price changes. Price elasticity o